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What is blockchain technology and how does it work?

The emergence and rise of cryptocurrencies and blockchains has gone hand in hand with the digitalization of our society.

In 2009, a person (or group) known as Satoshi Nakamoto has devised the blockchain. A blockchain is a software that stores information across a network of personal computers.

As its name suggests, it represents a chain of information-containing blocks. Each block includes three components. The data, the hash and the previous block’s hash. This last feature is what gives the system its security and stability. Namely, if someone would tamper with one of the blocks, this would automatically invalidate all subsequent blocks. That is, except for the first one, the so-called genesis block. In such a concept, the hash serves as the data’s fingerprint or signature.

Applied to cryptocurrency, for example, the bitcoin blockchain stores the data of sender, receiver and the amount of coins.

A major feature of the technology – and the cryptocurrencies which derive from it – is its decentralized nature. There is no central entity that manages this chronological chain, but rather a peer-to-peer network. Upon joining it, one gets a full copy of the chain. The record of every transaction ever made is called the ledger. Thus, each link verifies the validity of the entire chain.

The full potential of the blockchain technology was utilized in 2009 for the creation of the first cryptocurrency in the world – the bitcoin.

What is a cryptocurrency?

The original idea of a cryptocurrency was to exclude the middleman. With all the commodities we have with today’s financial transactions, each of them still goes through a bank.

People frequently describe cryptocurrency as “virtual money”. Hence, cryptocurrency is a digital currency with no government issuing it. Also, there is no bank managing and administering it. What does that mean in practice? Well, most importantly, that there is no central organization deciding on adding more currency to the market. This is in stark contrast with traditional currency.

We could describe a bitcoin as a digital file containing information on transactions. Or an addition to a blockchain, monitored by each member of the network. When making a transaction, a cryptocurrency user will announce doing so to everyone else. They will provide several pieces of information to the entire network. Their account number, the account number of the person they’re sending currency to, and the amount of currency. So, everyone else will then record this data.

But how are bitcoins, or any other digital currency, generated? And how does monetary value come into this equation? You have probably heard of bitcoin mining. Mining entails using special software to solve complex mathematical problems, with a certain amount of bitcoins received as a reward. That is how more currency is issued. Also, it is how all members of the network are motivated to take part and control the validity of transactions.

One bitcoin is divisible in 100,000,000 units. Thereby, each unit is identifiable and programmable. Features assigned to each unit do not only imply monetary value. They can represent shares in a company or digital ownership certificates, among others.

In late 2016, the total size of bitcoin’s blockchain ledger has surpassed 100 GB of data. The overall value of the bitcoin in mid-December 2017 was estimated at almost 250 billion dollars. However, there are thousands of other cryptocurrency platforms – Ripple, Ethereum and Litecoin, to name just a few.

What does the future hold for cryptocurrencies?

The future is difficult to predict, as expert opinions vary on this subject. They range from those who describe it as an economic bubble destined to crumble. Many are also voicing concern that cryptocurrencies could irreparably damage global economy. On the other hand, there are those who believe cryptocurrencies will steadily be incorporated into traditional ways of handling our finances.

There are literally millions of different stocks available in the stock market. You have everything from the big companies like Microsoft and Apple, to little public companies you have never heard of. With all these companies and stocks, it can be difficult to keep track of them all, which can be a bit of an issue for investors looking to make their next offer.

Fortunately, someone saw this problem and created stock market indices. This is great way to see the value of entire groups of stocks without having to individually measure their values. A stock market index is not difficult to understand and if you’re a big investor they will help you a lot when it comes to choosing an area you want to invest in. The general basis of a stock market index is that it groups together big stocks to make them easier to value and measure. Continue reading for a more in-depth explanation.

What is the Stock Market Index?

A stock market index is an overall value produced when a number of stocks are combined and have their values expressed against another value on a specified date. Essentially, the value of several stocks are put together which is then represented by one value. This allows for large stock groups to be tracked and measured over time, allowing for better investment opportunities. One of example of a sto

ck market index is the Poor’s 500, which takes 500 US companies and combines them into one index value.

How Does a Stock Index Work?

So as we have just discussed, a stock market index is a value of several stocks combined. This gives that stock market an overall value. This value can change over time and helps investors compare the changes to their portfolio. If the stock index goes up one level, it essentially means the group of stocks has also increased by one, making it more appealing to investors. Of course, if that market drops by one level, the index will also drop by one level.

However, not all indices work like this. If the total market value of the DJIA drop by 9%, the index might not act in exactly the same way. In fact, this particular stock market (DJIA) is said to give a better representation.

The Most Common Stock Index

There are a lot of different stock indices and they all group together large number of stocks into smaller stock markets. Among all the indices that are available, the most common one has to be The Dow.

The DJIA (Dow Jones Industrial Average), which has been briefly mentioned above, is probably the oldest and most well-known stock index in the industry. The index contains some of the most important companies in the US, which currently stands at 30. The DJIA is a price-weighted index and used to be calculated using an average. This involved adding all the price-shares of each company and then dividing them by the number of companies in the index. However, this is no longer the case and more advanced algorithms now calculate the index.

The reason this index is so well-known is because changes here usually indicate changes in the entire stock market. Because the companies in the index are so huge and well-known, when they start to swing, it usually means everywhere else will too.

Conclusion

When you are first starting out you need to be able to understand stock indices. They are very important if you are investing because they can indicate whether or not there is a lot of risk in that particular market. Learning to look at larger indices is also important because some (like the DJIA) can tell you what is happening in the entire stock market. With the right experience and knowledge, stock indices are very helpful.

With an increase in the number of people who own smartphones social media has come to be one of the fastest growing markets. This makes social media stocks a great investment that is likely to be beneficial to the investor. There are however some social media stocks that are doing better than others. Most have actually failed in being good investment options as shown by progress from the last 10 years. So, which social media stocks should you buy? Only those that perform well will be profitable to you. If you have been thinking of looking at the trend before you invest here are 4 social media stocks to keep an eye on.

Facebook (NASDAQ:FB)

Facebook is undoubtedly the world’s largest social media site. It receives over 1.84 billion users every month. The company also owns Whatsapp and Instagram which only adds to its number of users even more. These have 1.2 billion and 600 million users respectively. The facebook Messenger app has more than a billion users. With so many users, Facebook is able to reach very many people all over the world. This is why many advertisers choose Facebook as their preferred medium of advertisement. It is actually the second largest display ad company. With this revenue from advertising comes money into the pockets of investors.

In 2016, the number of monthy active users increased by 17% while the $8.8 billion revenue was 51% higher than the years before.

In 2017, the Zuckerberg led team is introducing new ad products, making video ads better and the number of users rising. These strategies combined with the existing ones are expected to improve the revenue by 37% and the earnings by 28%. This gives it very good prospects for the future and should definitely be watched.

The best part about Facebook stocks is that they are not expensive. Its trailing P/E is 21 and while the forward P/E is 40.

Weibo (NASDAQ:WB)

This is a Chinese microblogging platform that is at times referred to as the Twitter of China. It mixes the best of Twitter with the best of Facebook and Reddit. There are many celebrity powered account but users still get to have threaded conversations and create groups based on their interests.

Weibo’s largest shareholder is Sina while the second largest is Alibaba. Other people can buy shares of this social media platform as well. Why should you invest in Weibo?

The company is growing very fast. In 2016 its total revenues grew by 43% to $212 million from the previous year. The GAAP net income increased by 125% to $43 million while non-GAAP earnings increased by 134% to $77 million. This made Weibo one of the fastest growing social media platforms.

This year, Wall Street expects Weibo to grow its revenue and non-GAAP earnings by 51% and 62% respectively.

How much does the stock currently cost? The forward P/E is 39 which though expensive, it is worth a try if its growth is anything to go by.

The Meet Group (NASDAQ:MEET)

This company was also known as MeetMe. It has many social media apps like Skout, hi5, Tagged and MeetMe all of which are integrated. In the first quarter of 2017, the company registered an increase in Mobile daily active users by 75% while the total users increased by 87%. There are a total of 8 million users with 2 billion accessing the apps daily. Users spend on average 40 minutes online and each watches about 23 minutes of video content a day.

On first glance you may want to compare this smalls social media company with the likes of Facebook. However, this one is smaller but the growth that is has shown and what is expected is tremendous.

The first quarter of 2017 brought in $20.1 million in total revenue with the mobile revenue growing by 61%. The management of the company predicts that the revenue will grow to over $30 million in the second quarter and $128 million for the whole year.

With the company saying that it will spend 20% of this year’s revenue on marketing the number of users is likely to grow more and the revenue as well. The future is bright for this social media stock.

Match Group (NASDAQ:MTCH)

This company is the owner of many popular dating sites and apps like PlentyOfFish, OKCupid, Match.com and Tinder. Tinder is the biggest among all these with over 50 million users. Last year it accounted for 92% of the company’s revenue.

In the last quarter, the number of paid member plans per month rose to 5.7 million and the total revenues increased by 20%. Experts predict that in 2017, Match Group will see a rise of 8% and 11% in revenue and earnings respectively. That growth may seem a bit slow but it is because the company is selling everything they own that id not for dating. When they concentrate on the dating apps and sites, you can expect a revenue that will grow by over 20% in 2018.

As for giving you value, Match Group is one of the best choices with a forward P/E of 15 and trailing P/E of 25.

Candlestick charts are a technical analysis tool that packs data for multiple time frames into individual price bars. There are many significant benefits of candlesticks. While a line chart gives you only one data point for a stock at any point in time, candlesticks actually give you five: open, close, low, high and direction of movement. This is a major advantage when your trading decisions are based entirely on price action.

Completed candlestick charts are used in stocks, equity, foreign exchange and commodities trading to predict price direction. Proper color coding adds depth to candlesticks.
Today, candlestick charts are used internationally by day traders, swing traders, investors, and premier financial institutions. Candlesticks can be used in all time frames, whether you are a long term investor or a day trader.

What are some of the benefits of candlestick charts?

Easy to understand

Whether you are an amateur with regard to technical analysis or professional stock exchange trader, you can easily understand candlestick charts.

Give unique and more detailed market insights

Unlike bar charts which show only the trend of the move, candlestick charts additionally show the force that has brought about the move.

Provide early indications of market turning points

Candlestick charts can send reversal signals in a few sessions , rather than the several weeks needed for a bar chart reversal signal. This helps a trader to enter and exit the market with better timing.

Ideal for all markets

Candlestick charts can be used in the stock market, forex market, commodity market and can be a powerful trading tool for option trading.

Different parts of a candlestick chart

A candlestick chart has various parts with each of them having a different meaning.

Upper shadow – This is the top of a candlestick chart and shows the highest price. The body – A candlestick chart can have a green or red body. A green body signifies a bullish trend while a red body signifies a bearish movement. The shape of a candlestick body can either be short or long. A green , long body suggests that buyers are the ones controlling the market and the price is increasing. On the other hand, a red, long body suggests that sellers are controlling the market and the price is decreasing.

If a candlestick has a short body, it means that the market is uncertain. The shorter the body, the harder it becomes to predict the direction of the market.
When a candlestick lacks a body, its termed as Doji, meaning the trend is neutral. Neither the buyers nor the sellers are in control.

Lower shadow – This is the bottom of a candlestick chart and it shows the lowest price.

Basic candlestick patterns

Long black candle

It represents a bearish period in the market. During a trading session, the price of the stock was high and low in a wide range and it opened near the high and closed near the low of the day.

Long black candle

It represents bullish period, meaning prices were all over the map during the day, but the stock opened near the low of the day and closed near the high.

Spinning tops

These are small , black or white bodies. This pattern signifies a very tight trading range between the open and the close, and its considered somewhat neutral.

Doji lines

These ones show periods in which the opening and closing prices for the period are very close or exactly the same.

There you have it. These are the major things you need to know about candlestick charts. Overall, these charts help stock traders to predict emotions surrounding a stock hence helping them to make better predictions about where that stock might be headed.

What is a stock broker?

According to the Business Dictionary, a stock broker is a licensed individual or body with the following qualifications. He or she has passed a certain test and is certified to offer investment advice. He can counsel customers on if to hold or sell securities. He or she can execute the selling or buying of investment orders by his or her clients. He or she also charges a percentage of the transaction to cover his or her fee (Downes, J., & Goodman, J. 2014).

Qualifications and Licensing of stock brokers

You can become a stock broker with as little as a high school diploma in a business related field. This is, however, a field where once qualification and past successes dictate one’s future. Bearing this in mind, having extra qualifications is an added advantage. These extra qualifications can come in form of, a bachelor’s degree. According to the Bureau of Labor Statistics, a bachelor’s degree is the least requirement for a career as an entry-level stock broker. The common stock broker degrees include economics, finance business, and accounting. For you to work in an investment firm or bank a bachelor’s degree is also mandatory (Bodie, Z. 2013). There is, however, no specific majoring needed but one in a business related field is recommended. Extra classes in statistics or mathematics can allow you to stand out among a pool of stock brokerage candidates.

Duties of a stock broker

Similar to other occupations stock brokers have duties and responsibilities. Among these duties include the duty of fair dealing. The security industry demands fair dealing from all of its employees. Fairness and honesty must be exercised in all the dealings with customers. There are even bodies like the Financial Industry Regulatory Authority (FINRA), put in place to ensure that these virtues are practiced. These bodies also ensure that these laws are legally enforceable.

Stock brokers are also expected to be loyal. Due to the fact that stock brokers earn their money through a commission, there is a chance of a conflict of interest to take place. Stock brokers can focus on their interests and increase their own income or focus on the customer’s needs and increase their interests. Duty and loyalty ensure that the needs of the customers are always put first.

As a stock broker, you are expected to disclose all the relevant information to an investment to your customers. For a customer to make a decision that is most profitable, he or she needs reliable information (Prentice, R. A. 2011). Stock brokers are expected to provide their customers with this information regardless of their other investments or possible personal loss. Brokers are also obligated to inform their customers of any risks that may affect their investments. No stock broker should perform any activity in the customer’s account without their approval. The only way a broker can do this is if the customer has given a broker power of attorney to make trading decisions.

Conclusion

In conclusion, a stock broker is anyone or anybody that is licensed to offer financial investment advice. To become a stock broker is possible with as little as a high school Diploma. Additional qualifications in a business related field are an added advantage. Among the duties of any stock, broker includes loyalty to their customer, fair dealing in their operations, a full disclosure of information to their clients and fair.

Support and resistance have long been vital trading indicators. With their roots in the supply and demand theory, these concepts represent key junctures where the forces of demand and supply meet.

Support and resistance are undoubtedly the most important attributes of technical analysis. Usually, they are used by traders to refer to price levels on charts which might act as barriers which control the movement of the price of a stock or a security. They are the levels from where the movement of this price tends to stop or reverse back. They represent the levels where quite a few traders might be willing to buy or sell the stock on various platforms.

What is support?

Support is defined as the price level at which demand is thought to be strong enough to prevent the stock price from falling any further. Whenever the price reaches the support level, it has difficulty going past that level. The logic dictates that as the price declines and approaches support, buyers become more inclined to buy a sellers become less willing to sell. By the time the price reaches the support level, demand will tend to overcome supply and stop the price from falling below support.

What is resistance?

Resistance is the opposite of support. It is the price level at which supply is strong enough to prevent the stock from increasing any further. The rationale is that as the price approaches resistance, sellers (supply) becomes more inclined to sell and buyers (demand) become less inclined to buy. By the time the price reaches the resistance level, the supply will overcome demand and prevent the price from rising above resistance.

Support and resistance levels are important points in time where the forces of supply and demand meet. These support and resistance levels are seen by technical analysts as crucial when determining market psychology, supply and demand. When these support or resistance levels are broken, the supply and demand forces that created these levels are assumed to have moved, in which case new levels of support and resistance will likely be established.

Some characteristics of support and resistance figures:

They help stock traders to arrive at entry or exit prices.

They are a useful aspect of trends as they help traders to make trading decisions and identify when the trend starts to reverse.

Round numbers are important in support and resistance levels. The increased selling and buying pressure at round numbers lends them psychological importance.

The importance of support and resistance

Support and resistance is a crucial part of trends as it can be used to make trading decisions and identify when a trend is reversing. Besides, these barriers form the basis of many successful trading strategies an almost all market stocks, bonds, forex, options, futures, commodities, and many more.

Moreover, support and resistance are determinant forces in the market. They represent price levels where traders can make financial decisions about profit and loss.

Identifying support and resistance

There are many indicators that have been developed to help identify these two barriers. However, using them effectively takes some practice and experience. Support and resistance can be easily identified with the help of moving averages. Besides, the Fibonacci retracement tool can be used to determine these levels.
Generally, support and resistance play an important role in technical analysis. Furthermore, they are key tools used by research firms, stock advisories, and broking firms which provide stock tips based on their technical analysis.